Saudi Arabia's stock benchmark Tadawul All Share Index (Tasi) posted a sharp rise in quarterly profits which hit SR16.8 billion ($4.47 billion) in the first quarter, up 14 per cent compared to SR14.8 billion last year, said a report.

Tasi is re-charging for the next rally after a positive run from December 1 last year to April 3 thus generating a 30 per cent uplift in value which soared from 6100 to 7900 in 2012, said Alkhabeer Capital, a boutique Saudi investment firm, in an overview on the performance of the Kingdom's index.

Within this jump, the transport and real estate were the two biggest market outperformers and they also generated the highest profit growth, which proves that the rally was not completely speculative rather it had strong fundamentals to support it, the report stated.

However, these two sectors make up approximately 5.2 per cent of the total market capitalization and therefore did not contribute significantly to the 30 per cent growth in Tasi.

According to Al Khabeer, both petrochemicals and banks underperformed the market in terms of price growth during the period between December 1 to April 3, 2012. However based on market capitalization, they were the highest growth contributors during the same period, it added.

Petrochemicals profits for first quarter declined by 12 per cent compared to the same period last year whereas banking profits for the same comparison grew by 46 per cent.

This suggests that the banks are likely to outperform the market in terms of price movement going forward, said the Saudi investment group in its report.

Both, agriculture and food industries as well as media and publishing sectors performed poorly in terms of profit growth for the first quarter compared to last year. However, they have outperformed the market in terms of price movement, the report stated.

Therefore, going forward these sectors are likely to underperform, said the report from Al Khabeer Capital.

On the 2012 outlook, Al Kahbeer said the energy and retail sectors were expected to outperform the market in the coming quarters in terms of price movement because a comparison of Q1 2012 versus Q1 2011 shows a profit growth greater than the market average but their price movement during this rally has been below market.

The remaining sectors are expected to perform in line or slightly above market as their profit growth and price growth are in line, it added.

On the short term outlook, the Saudi investment firm said the market has jumped 30 per cent and corrected 9 per cent as it rallied from 6100 to 7950 and then corrected to 7200.

'We believe that 7200-7150 may be the price bottom for the near future,' the report added.

However, post the corporate results period, the market is vulnerable to the impact of international news, said Al Kahbeer in its report.

On the international front there are the results of the French presidential elections and the ensuing political and economical repercussions, in Europe.

In tandem with this and the weak US corporate results recently announced, “the bears” have the opportunity to comment negatively on US markets strengthened by challenging macro-economic news from Europe.

Declining US markets and a possibly stronger oil price scenario suggests that the Saudi market may remain range bound for a period of up to two months, the report said.

'We expect the current run-up to test the 7700 level before the market steam slows down again for a correction which can take the market close to 7000 level. After this slow period, the market is likely to start another rally around June-July 2012 to test the 9000 level during the second half of the year.'

'Over the next two months the market might be sluggish to negative but during the second half  we expect another good rally, which can take the market up to the 9000 level,' said Al Khabeer Capital in its conclusion-TradeArabia News Service